Taro asks shareholders to vote for its board nominees, reject Sun

By Lisa Kerner

Charlotte, N.C., Dec. 11 - Taro Pharmaceutical Industries Ltd. once again urged shareholders to support the company's board of directors at the annual meeting on Dec. 31.

The company, in a letter on Thursday, reminded shareholders of Sun Pharmaceutical Industries Ltd.'s efforts to "seize control" of Taro at a price that it considers to be too low.

"In addition to the financially inadequate price Sun is offering, you should be aware of the serious corporate governance and legal controversies facing Sun as a result of its stewardship of Caraco Pharmaceutical Laboratories, Ltd., a U.S. based company in which Sun controls a majority of the shares," Taro said in the letter.

According to Taro, not only has Caraco's stock price declined 65%, but the Food and Drug Administration has seized its inventories and effectively closed down its manufacturing operations.

On Tuesday, Taro sent a similar letter to its shareholders, warning them that Sun may wage a proxy battle to gain control of Taro's board.

Taro told shareholders that Sun has, for the past 18 months, tried to take over Taro "by every conceivable means except one: by agreeing to your board's demand that Sun offer a fair price to shareholders."

According to Taro, Sun's continuing $7.75-per-share tender offer is "significantly below current market prices."

Taro shares closed at $9.25 (Pink Sheets: TAROF) on Thursday.

Sun has also refused to comply with Israeli special tender offer rules designed to protect minority shareholders in the event of a takeover attempt, according to Taro. The matter is pending before the Israeli Supreme Court.

In May 2007, Taro agreed to be acquired by Sun for $7.75 per share and then terminated the merger agreement in May 2008. Sun offered to increase the price to $10.25 per share, which Taro rejected.

As previously reported, Sun exercised some options to acquire shares of Taro from the company's controlling shareholders on June 25, 2008 and began the tender offer on June 30, 2008.

Taro is a pharmaceutical company with offices in Israel and Hawthorne, N.Y.

Mumbai, India-based Sun makes specialty pharmaceuticals and active pharmaceutical ingredients.

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